About this Show

Worldwide Exchange

News/Business. Ross Westgate, Kelly Evans. Ross Westgate and Kelly Evans consider the business stories that have global significance. New.

NETWORK

DURATION
02:00:00

RATING

SCANNED IN
San Francisco, CA, USA

SOURCE
Comcast Cable

TUNER
Virtual Ch. 58 (CNBC)

VIDEO CODEC
mpeg2video

AUDIO CODEC
ac3

PIXEL WIDTH
528

PIXEL HEIGHT
480

TOPIC FREQUENCY

Santander 24, Us 22, U.s. 19, Europe 14, Hoveround 8, S&p 8, Ross 7, Spain 6, Julia Boorstin 4, Euros 4, Chicago 3, Australia 3, Reuters 3, Nomura 3, Astrazeneca 3, Frankfurt 3, Donald 3, India 3, Sylvia 3, Zuckerberg 2,
Borrow a DVD
of this show
  CNBC    Worldwide Exchange    News/Business. Ross Westgate, Kelly Evans. Ross Westgate and  
   Kelly Evans consider the business stories that have global...  

    January 31, 2013
    4:00 - 5:59am EST  

4:00am
4:01am
hello. welcome to today's "worldwide exchange." i'm ross westgate. >> and i'm kelly evans. these are your headlines from around the world. >> costly cleanup, deutsche posts a bigger than expected fourth quarter loss. santander's profit dropped as it sheds real estate assets. >> a different story in japan where the stock market rally
4:02am
helped boost things in the third quarter. nomura's financial profit is up ten fold. earnings fall short of expectations, astrazeneca warns of a tough year. and boeing is sticking to the flight plan as its outlook rises. all right. welcome to today's super thursday. >> i was going to say, if you thought the super bowl didn't come until sunday, you clearly are looking at the wrong kind of event. the financial markets, it's all happening today. tons of earnings. >> and jobless just.posted according to the labor office,
4:03am
the jobless change according to the reuters forecast was to increase by 8,000. >> the unemployment rate, i believe, improved in january. >> 6.8% versus 6.9% in december. the unemployment rate coming down and there were less jobless than what we thought there would be. >> and when you consider what happened is in the german economy in the fourth quarter, the headline gdp figures disappoint and yet the employment data looks okay. >> which is one of those things. we'll cure our eyes on the reaction to that. plenty of news to come, as well. plenty to come on the show. let's remind you what is on today. it's all about financials not just in europe and japan, but in india where the country's biggest lender has just posted number peps we'll be out to mumbai for a breakdown. and what are the traders saying? at 10:45 european time, we'll have our eyes on stocks from the london trading floor.
4:04am
>> other indices around the world posted record indices around the world in january. >> and we'll explain more in a little bit. first, deutsche bank shares are trading higher today after the group reported strong operating performance for its divisions in the fourth quarter, despite posting a heavy loss. the german euro booked a 1 million litigation charge which led to restructuring. in an analyst call, it was said the group does not need to issue more sales but left the door open for the cocoa bonds to comply with u.s. regulations. >> meanwhile, santander shares are trading lower after the net profit more than halved to 2.2
4:05am
billion euros in 2012, hurt by write-downs on property asset necessary spain and a slowdown in latin america. santander says it's returning more than 24 billion worth of ltr loans having taken 35 billion in ultra cheap etr funding. shares down about 2.5%. there's stephane pedrazzi now joins us from madrid. stephane, what's the reaction? >> we've seen a limited market reaction at the open. it's now trading 2.5% lower. the numbers were below expectations. the net profits were the weakest for the last 13 years. 2.21 billion euros. the contends of reuters was at 2.5 billion. there were some massive provisions last year. it's not a big surprise. 18.8 billion euros in total to cover potential losses on the property portfolio. santander says it has completed now its program provision that
4:06am
was requested by the government. more surprising, the declining profit from its latin american division that was prapt the most unexpected announcement in this earnings report. the bad loan ratio which has key metric necessary spain is up 4.5% as a group for a whole and 6.7% for the spanish operations of santander. of course, it's rising, but it's well below the average of the spanish banking sector which is at 11.4%. that was a record level at the end of last year. in terms of solvency, the bank gave an update this morning. and you stated the bank announced it has decided to repay 24 billion euros to the ecb as part of its ltro from the 55 billion euros that santander took from the ecb. on a positive note, the chairman of the bank is expecting a strong growth in earnings this year. where are will the growth come
4:07am
from? that will be a very interesting question to ask this morning at the press conference that the company is going to hold in madrid. with that, i send it back to you. >> stephane pedrazzi, thank you very much. >> and also with us, silvia wadhwa, who has parked herself outside deutsche bank's headquarters, what's the reaction there? >> the reaction there, we'll find out in the interview a little later and in the press conference that starts momentarily. of course, the bottom line is that the numbers we saw this morning were worse than expected. a lot of it, of course, courtesy to, in cynical terms, to the debris left behind by the predecessors of the leadership that's in place now because we talk about risk provisions,
4:08am
about write-downs, about a little bit of money set aside, a little bit in very broad terms, money set aside for potential litigation, scandals, etcetera that the bank might still have to pay out for. aside from the problems they've got, the operational problems with integrating and restructuring cross bank, fits and promise, a cultural change at deutsche bank. one would say back to the rules, back to classical banking. but the question is, will they actually deliver on that? can they even deliver on that without hitting the bottom line of the bank too much? >> fair point. let's put that question to ollie. >> good morning. yeah, absolutely. banks, large investment banks like deutsche bank are facing some element of existential crisis within the context of the new regulatory regime or the age
4:09am
of regulation that we're in. that's fair none. there's a bare docks there. you're talking about the debris let me tell behind by ackman but he also made the bank into what it is and the expectations along with that. the profit expectations didn't meet the cause of various thing, but good will impairment and litigation charges. what does that mean? it means they're trying to draw a line under the old and sort of set themselves up for the new, you know with progress and strategic plan. >> and is that why you think investors aren't sending shares lower today despite the profits for the group? >> no. everybody has been expecting deutsche bank to change for a while now in light of the regulatory further that's going on after the crisis. and, you know, they can't not address this. they have to do something about capital in particular. and think about litigation. those seem to happen at a fairly
4:10am
regular basis these days as to actually deny the sense of them being one of -- >> sylvia? >> how much is that symptomatic from where we are in the banking industry altogether? i'm sadly old enough to have reported about the banks already in the mid 80s. somebody like deutsche bank was a big, huge bank, but a big, huge bank that made money with classical business. now it seems they want to turn almost a full circle and come back to be export facilitators, credit and loan bankers and sort of push down the investment banking side of things which has been in the profit center for more than 20 years now. can the banks even turn around or do they want to? >> well, i think you've got a problem if all banks follow that same strategy, if all banks step away from investment banking because it's not profitable but then, obviously, that leaves a large hole.
4:11am
obviously in the terms of provision of credit to the real economy. and i -- obviously, a large part of all of this is regulation and the speed that that's coming in and the extent that it affects the investment banks more than alltory banks. but if at the end of this process, as you say, all european banks follow the same strategy of being domestically focused retail banks with very little else outside of that, they're not going to be particularly profitable in the long run. >> that doesn't necessarily sound like a euro wide banking union, either. aside from the fact that deutsche has been up a little bit, santander is down and banks are generally weaker across the board. >> first of all, you obviously have capital levels. people are concerned whether the banks have enough capital. secondly, litigation risk and finally, default levels. there is so much focus on we need a banking union, we need unity and oversight. there are two key things missing at the moment, and first of all,
4:12am
that's for the ecb to have authority. there's no banking resolution in place and secondly for this deposit guarantee scheme that would give people confidence to, again, bring the assets back. >> and that's barely a glimmer in people's eye. any sign of progress on those fronts? because it seems as though the resolution of the near term crisis in europe has kicked these issues far into the future. >> absolutely. regulators had their chance in 2009, the height of the aftermath of the crisis in the g-20 meeting in pittsburgh and they came forward with, you know, a massive remove relagz that affected everything with the culture of banking. and now that the crisis in europe at least has abated to some degree, you know, the pendulum is swinging back. people are starting to say, well, you know, that this might affect credit to the real economy and that's always been our tag line, that you get the regulation of the economy contracts. >> in davos, it was said taking
4:13am
a look at the global banking sector and if you're going to invest in banks, you invest in the big guys in each market. despite the fact that today deutsche and santander seem to have issues, if you are going to invest in banks in those countries, the big companies are the ones to buy. >> absolutely. these are just the earnings today. as i say, these two banks have tried to portray 2012 as, you know, the past, the old problems, and drawing a line under that and saying, look, this is the capital we've got. this is how we're prepared for 2013. santander's ceo even going as far as saying there will be report results or very rewarding results in 2013. >> and you can see investors looking through what they're saying at santander and what deutsche bank has to say. olly, thank you for coming by. sylvia, really appreciate it, as
4:14am
well. jemma will stay with us. we'll have the ceo on later today. if you have any questions, send them in. e-mail us, worldwide@cnbc.com. tweet us, @cnbcwex. plenty more to come on the program. >> all right. here we are. just over an hour into the trading day right now, you can see it's 2 to 8, advancerses outpacing the decliners. going through the top stocks for you today, maybe we won't. there we go. the ebex down 1.9%. xetra dax down 0.4%. cac 40 down 0.6%. lonmin, up 7%.
4:15am
ericsson, 9.52%. saipem up 2.64%. as far as bond markets are concerned, we did see yields come down post the fed. gilt yield lower, spain is a little bit higher. ten-year bund yields back down below the 1.17% we saw, as well. euro/dollar today while still maintaining those levels above 1 is.35. we did go higher yesterday. 1.3552. dollar/yen, maintaining the break above 90. aussie/dollar slipping down to 1.04. let's bring you up to speed with what happens in asia overnight. sixuan joins us out of singapore. >> thank you, ross. the market set back from the down beat u.s. gdp were somewhat offset and promising regional
4:16am
data. the nikkei finished in the green to post its best january in about 15 years. latest december factory output and january manufacturing pmi suggested the world's third largest economy may be recovering. s sumim sumimoto mitsui ended with net profits for december. nintendo took a hit over 5% after slashing its full year forecast and falling reports of game consoles. agriculture stocks rallied as property developers tumbled on talks beijing may introduce a property tax program for the city as early as the first half of this year. in hong kong, the hang seng lost .4%. the noble shares split 5.25% despite a record quarter in top and bottom line. that stock had gained 50% since
4:17am
last august to a multi year high. we are seeing some profit taking here. the kospi pulled back a modest 0.1% after gaining for two days. australia's asx 200 snapped a ten-day winning streak with miners losing. india's sensex now trading lower by 0.6%. back to you. >> sixuan, thanks for that. now a couple of web stories popping online, the dow joins industrial average yesterday, just 46 points from topping that trading high. can it take out that 14,000 mark? find out what analysts have to say at cnbc.com. after topping analyst estimates from the quarter, google is now priced at more than $750 a share. but if ths that stock going to from hot to too hot?
4:18am
find out on the website, as well. despite the initial disappointment, some analysts are arguinging the release of the new blackberry will be positive. still to come, the dreamliner, nippon airways has grounded nearly 500 flights this month. are they going to take off despite that turbulence? more when we come back. [singing] hoveround takes me where i wanna go... where will it send me... one call to hoveround and you'll be singing too! pick up the phone and call hoveround, the premier power chair. hoveround makes it easier than any other power chair. hoveround is more maneuverable to get you through the tightest doors and hallways. more reliable. hoveround employees build your chair, deliver your chair, and will service your chair for as long as
4:19am
you own your chair. most importantly, 9 out of 10 people got their hoveround for little or no cost. call now for your free dvd and information kit. you don't really have to give up living, because you don't have your legs. hoveround replaced the legs. and now every hoveround comes with this handy tote bag and cup holder for access to your favorite items. and right now, get this limited edition hoveround america travel mug free with your hoveround delivery. [singing] hoveround takes me where i wanna go. call or log on to hoveround.com to find out where a hoveround can take you!
4:20am
4:21am
nippon airways reported a 40% increase in its profits from a year ago. it does expect a $15 million hit from the grounding of the dreamliners. despite the uncertainty, the airline says it's sticking with its profits and revenue targets for the year ending in march. joining us from sin pore for more, director for aerospace. ashri enshi, thank you for joining us. the planes are still grounded. it's going to have a financial
4:22am
impact, but will they be able to claim that back? how much do you think they can claim back from boeing? >> yeah. at this moment, establishmenting how it is going to claim is difficult. they are trying to understand how long this dreamliner is going to be grounded and how do they back their short-term, medium term and long-term strategies. establishmenting any numbers will be difficult. of course, we have realized that $15 million dip happened due to the grounding of dreamliners still 18th of february. but claiming any amount at this moment is difficult to anticipate. >> yeah. take that away, what's the outlook for this airline? bear in mind the improvement that it's had over the last 12
4:23am
months. >> looking at recent investigation which is under way, the attention spans looking at the systems has moved the electrical systems and also the temperature around the systems. so the investigation may take more time. we expect to see in three to four time, it is going to be -- if it continues to delay to three to six months, there will be huge impacts both on boeing's branding, broeg's profitability for this year and the airlines which have grounded aircraft and
4:24am
ordered the aircraft in subsequent months. >> how much of this flight can they replay with older planes that have been multipled? >> at this moment, for next three months, able replace and getting the aircraft, arranging their own set of aircraft. but beyond three months, it will be very difficult for the airlines to replace or try to rearrange their schedules and drought. >> all right. so look, we wait to see what the impact is and you say it really depends on the length of the time for the investigation into the batteries and what has to happen with that. regardless of that, they've had efd a fairly good 12 months. so what is going on with passengers demands and pricing? >> at this moment, next 12 months, it looks like the
4:25am
industrial will grow and in spite of all these issues, the growth domestic hardenings is growing in this part of the world. and this will continue with the passenger traffic and cargo traffic. how this incident has lifted to the ticket pricing or how it is going to impact the passengers' wallet, not in this, definitely. but in longer term, if the airlines are trying to realign their strategies, trying to look at different perspective, then yes, some point of time, passengers may field that bench. thank you so much, indeed, for joining us. let's get a word with you. i don't need to comment about those airlines. >> i just noticed here in europe, ezjet and ryan air now
4:26am
have 08% of the domestic aviation routes. what do they offer for investors? it is a volatile sector. >> it is a volatile sector. coming back to his point, obviously, on japan, actually, i think japan is more of an interesting topic that investors are looking at at the moment. it's been out of favor for so many years and it's been the kind of asset class where it's been cheap, but it's been cheap for ages and what's going to be the catalyst. ahead of the bank of japan -- >> but it's up 20% in the fourth quarter. >> there has been a significant rally, however, if you look at where earnings are pricing with market, about 25% is pricing into bankruptcy. and earnings per share, if you cyclely adjust pe levels, we're on level with the u.s. and actually earnings should be
4:27am
stronger in the u.s. than going forward. it's an interesting area that has been out of love, out of favor for so long. >> one wonders in london. >> but that's a fascinating point. the industry has shrunk so much. it goes back to the airline space. we've talked on the show about investors seeing some optimism for this sector. a couple has been awarded compensation of 687.pounds after their flight was delayed in the first implementation of a landmark court european ruling. the court said this ruling is valid for measures such as the iceland kol containo eruption. so to recap, if people's flights were delayed, they can return for those. i think it's in the range of 240 pounds. the question is, should passengers be compensated for delayed flight? >> and where they're reporting it is where do you draw the line?
4:28am
what length of time on a delay where you allow it to claim? >> and how might that affect the way the airlines behave? >> yeah. and how will they claw that money back? >> exactly. so are we all going to end up paying for it longer term? >> there are something like two-hour delays on the trains? >> it will get passed through. where are you foot fees going to come out? ite going to be the man on the street that will suffer. >> will it help the industry if people know they can get some recovery for those damages? >> if you get on a plane or train knowing if it's delayed you'll get paid? is that your motivation for doing it? >> would you be more likely to go on a vacation somewhere, though, if you knew that your -- that is much more common over here. maybe it will hit with the travel insurance sector.
4:29am
anyway, lots of different aspects. send your thoughts in. worldwide@cnbc.com. tweet us, @cnbcwex. or tweet us individually with comments on his general appear yaps, as well. do we encourage that? >> anything you like, within reason. we can say the reasonable line on that. as dubai based profit education company gms is planning a major global expansion as it seeks to secure a larmer share of what it believes is a $3 trillion market. it raises questions about the role of for-profit companies. yusef joins us from dubai with more. hi, yusef. >> hey, ross. well, education plans toni vest as much as $1 billion over the next five years to increase its presence from at the moment from 11 countries to 40 to 50 cups
4:30am
over the next three or four years. this is a company that at the moment has more than 60 schools, more than 100,000 students, and it is looking to emerging markets in east asia and africa for that expansion. it is also a company that has come under heavy fire for placing profits ahead of the welfare of its students. it is part of a wider debate, really, about the role of for-profit schools. you have that debate in the uk, as well. not just that, but the growth of private equity in that industry and more consolidation and the ramifications for the quality of education for students around the world. here is what the chairman had to say on the matter. >> if you look at every industry in the world, it's all about profit. but in today's world, it's also how do you use this profit to
4:31am
improve community? >> i won't give away too much. so make sure you tune in tonight. i know, ross, that you probably have little better to do on a thursday night. it's all coming up later on. >> it's the first thing in my -- and you know this. i have it on link record on my sky plus. it's on link record. >> it's like pile on ross day. >> even if i'm not there, i get it. >> you never disappoint me, ross. >> quite good. you're not wearing quite the same outfit you were in davos. >> there's a color for every
4:32am
occasion. >> i'd like to know more about that one. when we come back, gloom for european banks, but not for japanese ones. and it wasn't all bad news for nomura, either. we'll take a closer look at they books when we come back.
4:33am
4:34am
4:35am
and these are the headlines from around the globe. costly cleanup for europe's biggest financials. deutsche has a bigger than expected fourth quarter loss because of restructuring and legal charges. and santander shares toxic real estate assets. >> in japan, the stock market rally helped boost banks options in the third quarter. nomura is up ten fold. profit taking is the order of the day in briton as the giant fell short of expectations and astrazeneca is warning of a tough year ahead. and nippon airways sticks to its financial outlook despite canceled hundreds of flights as its net quarter profits rise 40%. >> we're down to session low for european stocks. it's all about the earnings rather than the headline move.
4:36am
santander dragging down the ibex and other financials. 1.7% lower. >> and if you're wondering what's going on with the ibex, take a look at what's happening with spanish banks. down 3.4%. even credit agricole is down about 3%. not a strong day for financials this morning. and banks in particular are taking it on the chin. strong income helped drive 30% profits with icic bank. investor res cheering. >> theback has surprisingly not reacted very exuberantly to its numbers. the stock is down around 1%. the fundamentals are pretty much been in line, so profitability is up 30%.
4:37am
the niio has risen 30% on a year on year basis. in line is what they have been performing at. the fresh margins came in around 3% which is maintained in the quarter. what possibility didn't go for icic bank this time around with its restructured books. not to mention slippages which is basically fresh norms which company be the -- any more came in at around 850 which was a jump on a an adjusted basis. so the rate is expected to be 700 or 8el 00 in terms of
4:38am
slippages. it's trading at extremely lofty valuations. and the stock itself is up 22%. some people taking profits off today. with that, it's back to you. >> thanks for that. a 13% game net profit in nomura didn't live up to what people were expecting. it was shy of the 360 that investors were looking for. aggressive cost cutting and high revenue were the main profit drivers. analysts were looking for more given the 17% stocks in japanese stocks in december. japan's third biggest bank by market cap made 2.3 billion in the quarter thanks to the stock market's year-end rally. despite the gain, many japanese banks continue to hold question marks over the domestic economy. overseas lending is a bright spot.
4:39am
david, welcome. i love that we're looking at this as a credit side of things. let's start by broadly talking about the health of japanese banks here. how much is business story a better equity performance and how much is a fundamental improvement? >> yeah. there isn't too much in the way of fundamental improvement. that is contributing a little bit to the earnings. in the case of, you know, mizuho, which has been something of perennial underperformer of the japanese banks, i have to recognize there were some flight positives, as you said, overseas loan growth contributed to a 2% lending increase in march. since the loan books have been shrinking in japan, it's a positive sign. fee income is up about 7.%. they managed to get their costs down a little bit, so the underlying profit has improved somewhat. to be honest, still the really
4:40am
big factor for them is these huge items. they're booking very large profits from their investment bond portfolios. they were reporting very low levels of loan loss at the moment. which is good, but probably not sustainable for the long-term. so i think when you look at the roes that they're reporting, about 10% for mizuho, i think that overstates their true profit possibility. it's more like mid single digit roe. assuming they had a higher capital base that they probably need for basel purposes. i think their earnings currently are somewhat overstated and that's why they're being a bit cautious about their own forecasts. >> and the banks have a lot to do with this, which is to say are we at a real pivot point
4:41am
where the fundamentals are improving or is this a temporary reprie reprieve? how important is it for the banks to work through these legacy issues which in some cases have been with them for decades? are we at a point where we can safely stop talking about zombie banks? >> oh, yes. the big fat question is really can they achieve these sustainable earnings on an annualized basis? the real challenge i think for us bank analysts is that they really are not in control of their own destinies to make sure the outcome for them depends on how successful the new government is. the prime minister. if he is successful in reviving japan's economy, it will mean success for the bank. but if he fails to do that, if he causes the stock market to fall back or spooks the bond
4:42am
market, that would be very negative for the japanese banks. asset quality would be affected, as well. the banks are doing well at the moment, but to sustain that, really, required a bed, making a bed that mr. abe can achieve his plan of reviving japan's which he. >> a lot of factor toes consider. but given all this, what's your best recommendation as to how to play this sector? what should investors do? >> among these three mega banks, miss h mizuho is a perennial lagger. it is getting better than it was. but mitsui is stronger for its procedure profitable franchise in japan and it has potential to grow overseas, to improve its profitability. it's a very sound bank, but it does trail mitsui in terms of
4:43am
profitabili profitability. >> david, really appreciate your time today. >> honda has trimmed its annual profit forecasts by 11.4 billion. blaming the territorial feud with china. japan's largest carmaker posted a 33% jump in its profits helped by a favorable exchange rate but it was still lower than what analysts were looking for. >> japan's toshiba posted a better than expected operating profit. the company which makes flash memory clips blamed a weak global economy and a drop in tv sales. >> shell shares are trading lower this morning after the oil and gas giant reported a 13% jump in fist quarter profits. shares down about 1%. the company pledged to boost its dividend after adjusted eps of
4:44am
89 cents. that was below analyst forecasts per share. peter volser sounded confident going forward, citing the firm's solid cash position. >> shell is in the very good situation at the moment that we are actually not opportunity constraints. we are long in opportunities. we could even invest more, but we are taking a conservative few on how much we invest versus the cash flow that we are going to get. at the same time, as you are mentioned, we are increasing our dividend. >> meanwhile, diaji posted a 51% in profits. this is the world's largest maker the. earlier, paul walsh said strong growth in emerging markets would help jaut offset weakness in
4:45am
europe. >> europe is more like luster. we continue to see difficulty with consumer expenditure in southern europe. but it's a testament to the strength of the business that we can absorb that shock. >> i'm doing my part for diagio sales, ross. i'll just leave tlit. bskyb shares, they're trading higher after the tv operator posted better-than-expected earnings and announced higher dividends. the company said adjusted profit is up 8%. bskyb's ceo said the company was positioned to gain market share. >> i think we're gaining in all the market, whether that's tv, services or communications which is where about one in three of our customers take broadband from us. we're closing in on some of the market leaders. i think that's a big area of head room opportunity for us. >> all right.
4:46am
yes. i mean, you know -- >> super thursday. >> super thursday. what do you make of that? is it medium stocks or -- >> i mean, we don't have a specific -- i mean, technology has actually been one of the trends that we've been looking at just because the way that we see portfolios rotate sg towards recovery. so we have been focused last year on defenses, which is obviously served very well. but actually, they can't reach expensive levels. so instead, it's about looking to where the growth can come through. and laggard. for example, if you look at something like the technology sector, in that in between stage where you can get strong companies with sorid cash flows, you have that growth coming forward, as well. >> let's get out to jerry. let's run through these companies. shell stock, like saying shell shares, down this morning. where do we go? what do investors think? >> yeah. it was a sort of headline myth,
4:47am
actually, in the last couple of days. the two to three-day movement fairly flat. so i think just negative headlines today, a bit of profit taking after a good run up, probably in the medium term, a further leg up for shell shares. >> everyone has -- >> it's not easy. >> shell shares, say shell shares. diagio, look, throws off a lot of cash, joe, and they have emerging market growth. >> yeah. ee mermging market growth is key and it's get ago foothold into those markets is going to see the real future growth. their biggest market is north america and that looks like it's going to have some form of recovery, but it really is an emerging market. if they can get a decent foothold with their brands, it's a positive story for them and probably with what the world economy does, they will have significant growth. >> and what about the overall -- look, we climbed over 6,000.
4:48am
we got to the left level since 2008. a lot of people now wondering, is this the start of a major pause here or can we move higher in the short-term? >> i think today is probably going to see a little bit of window dressing. some managers will be sitting there rubbing their hands and say this is a nice start to the year. actually, the momentum or the first couple of weeks in january, february will continue. a word of caution, though. the spanish yields have been creeping up slightly without many people noticing they're up at 5.25% now. i think that my pit come back into play and probably the back end of february we're going to see a bit of volatility and i predict a serious move down. >> joe, thanks for that. >> our concern is the sustainability of the rally. >> you're the no. >> i am the no in the debate. can things just continue ever
4:49am
upwards? i mean, we are very confident in the long-term time horizon for stockses. but in a shorter term, we are concerned there might be some volatility because what we've seen is markets rally on the back of imminent risks receiving. but actually what we now need to see is some growth. we saw that yesterday with some u.s. gdp figures coming in. they did come in better than expected. everyone is focusing on consumption without realizing going forward there might be some pressure to do with the fiscal cliff. >> absolutely. it's slightly profily. >> yeah? do you want it straight on next time? >> more like -- >> so i'm looking at him, we're having a debate and i'm looking at him saying, no. still to come, equities have been on a run as we've been saying since january, but which emerging markets have been the best performers? >> there are some real surprises. we'll have the numbers when we come back.
4:50am
4:51am
4:52am
welcome back to the principal. you are watching "worldwide exchange." investors found a bit of good news and bad news in facebook's
4:53am
fourth quarter earnings report. the highlights, strong growth in the company's fledgeling mobile business. julia boorstin breaks down the number pes. >> facebook beat on the top and bottom line, reporting earnings per share of 2 cents more than expected on 40% revenue of a year ago. ceo mark zuckerberg kicked off the earnings call by talking about mobile saying for the first time more people use facebook on mobile devices every day than use facebook on the desktop. but he acknowledged that the shift to mobile has been challenging saying it's facebook's biggest opportunity. mobile monthly users grew 57% in the quarter to 680 million people while mobile ads are now responsible for 2% of facebook's total ad revenue. despite the beat, shares plummeted, rebounding to a few percentage points lower. perhaps the disappointment was because investors expected a bigger beat or were hoping to see more mobile revenue.
4:54am
zuckerberg moderated expectations on the call talking about ads being at the core of facebook's business for quite a while. but he did say facebook will continue to invest heavily, to grow head count and to invest in new businesses like graph search. facebook saying facebook is investing in the long-term growth potential rather than maximizing profits from right now. from cnbc los angeles, i'm julia boorstin. >> that's a report on facebook. you can see where we are with markets over that. the ftse has had the best, 6% up and the psi up 9.62%. that's the portuguese index. >> take a look at u.s. markets, too. as we look at those european index, so many of the gains came in the strong first trading day in january. it's also been a strong follow on month. the dow up 6%. now, that puts the dow on track for its best january since 1989.
4:55am
the s&p 500 up 5.3%, on track for its best january since 1997. of course, aside from the percentage gains, we're keeping an eye on a couple of key psychological milestones, if nothing else. 1500, you can see the s&p holding that level since about a five-year high. the all-time closing high for the s&p was 1565 in october 2007 for the dow. it was 14147 and the dow first crossed the high on any birthday, july 17th. >> if the s&p stays up 5% for the first month of january, it's 11 out of 12 times has been higher for the you're. >> i think double digit gains for the year, too. i'm always weary of those statistics because i feel like what value do they ever -- every situation is different, but generally speaking, good for the year. >> here is a look at some of those other markets around the globe, as well. always good to check in on that. >> and look, this is just
4:56am
year-to-date. look at what's going on in argentina despite the worries about what's happening with their currency falling, the inflation target. you buy 20% gains this year. >> ukd as easily lose 20%. >> and you have in the past. but athens, too, up 14%. >> we've seen the rallies and the consensus is still there. >> exactly. and when you see a move like this, it lms tells you to go the other way. athens showing double digit gains. >> people say, no, it's going to go the other way and then they miss the next 20%. >> but that's pain trade. the pain trade now is to miss out. it's not a case of we're going into the markets because we have cop flix. it's because we can't stand the underperformance any more. that is a concern. >> that is the problem with monthly reporting.
4:57am
if you have to report your performance every month and you're underperforming -- >> that's where the pressure comes. again, i think it takes confidence. what's the long-term strategy? it takes a lot of confidence to maintain that long-term horizon and saying, we're getting into equities. are these levels? we're feeding it in a longer term. we're having access through companies we stay with in the long term. >> any examples there? >> it's more looking at the laggards as opposed to defensive expenses. so we're looking more thee mattockly as opposed to specifics. >> and worries about being overvalued here for the next couple of months. so when we talk about trades to put on now, how do you play it? >> we're looking, it is mainly the equity trade because we're looking at the bond markets and thinking that spreads are at multi year lows and it's hard to find value there.
4:58am
we're not looking at governments. we're looking more on the credit side. so we are looking at equities. where in equities? gn, rerotated out of the u.s., back into europe towards -- it was last autumn, actually, which works very well for us. it's about changing where you're allocated. >> perfect. thank you so much for coming by. earlier on the show, we asked you, should passengers on delayed flights be entitled to passenger compensation? it's happening in europe. john tweets in and says, late flights more than a couple hours should be xielthsed to compensation. but that will lead to higher fares. jason says, compensation pushes airline toes cut corners and take more risks. keep the comments coming. worldwide@cnbc.com. tweet us. >> we'll be back. [singing] hoveround takes me where i wanna go... where will it send me...
4:59am
one call to hoveround and you'll be singing too! pick up the phone and call hoveround, the premier power chair. hoveround makes it easier than any other power chair. hoveround is more maneuverable to get you through the tightest doors and hallways. more reliable. hoveround employees build your chair, deliver your chair, and will service your chair for as long as you own your chair. most importantly, 9 out of 10 people got their hoveround for little or no cost. call now for your free dvd and information kit. you don't really have to give up living, because you don't have your legs. hoveround replaced the legs. and now every hoveround comes with this handy tote bag and cup holder for access to your favorite items. and right now, get this limited edition hoveround america travel mug free with your hoveround delivery. [singing] hoveround takes me where i wanna go. call or log on to hoveround.com to find out where a hoveround can take you!
5:00am
5:01am
welcome to "worldwide exchange" 37. >> here with your headlines from around the world. >> costly cleanup for europe's biggest banks. deutsche posted a bigger than expected restructuring. santander posts losses, as well. investors were left wanting
5:02am
more. ft. if it is giants like shell see earnings fall should it of expectations. as tra zen wa karns of a tough year ahead. and disappointing german retail data weighing on stocks. annual sales dropped by the most since 2009. the number of people out of work above 3 million in january. take a quick look at u.s. futures, markets have turned in pretty extraordinary performance. the dow actually taking fair value into account is looking to open lower by about 10 points. similar declines for the nasdaq and the s&p. 1400 for the dow, on track for its best january since 1989. the s&p's best january potentially since 1997.
5:03am
forget sell in may. should you sell in january? the ftse cnbc global 300 gives us a sense of what we've been seeing play out overnight, giving up the rally, down about .1%. the european bourses in particular showing you where the pressure is coming from. in particular, it is among spanish banks. the ftse 100 is down. the xetra dax down about 0.3%. deutsche shares are moving higher. the cac 40 down 0.6%. the ibex is the weak link this morning down 11.8%. santander disappointed the whole sector is trading lower. >> numbers more than half of the earnings, as well. let's show you the stocks in focus this morning. one of the stand out sess erikson coming out with higher than expected fourth quarter core profit. revenue growth, as well. raising hopes finally shaking off the global downturn. stocks up 1%. lonmin coming up with fairly good numbers, up 9%.
5:04am
saipem after banning short selling, is up 3.44%. astrazeneca saying it's going to be a tough year, its stock down around 5%. as far as bond markets, post u.s. gdp number and the fed yesterday, we have seen treasuries hit back. gilt yield is lower. italy up 4.3% despite borrowing costs yesterday. better stocks over 2010. ten-year spanish yields nudging up to 5.25%. down below 5% a couple of weeks ago. and bund yields, remember, we talked about the technical level. but below it at 1 is.67%. currency markets, euro/dollar still trying to hold on to recent 14-month highs. above 1.35. we're flat on the session. 1.3564. dollar/yen, maintaining gains above 91.
5:05am
aussie/dollar, range bound is where it's been. sterling/dollar, back over 1.58. that's where we stand right now in europe. ahead of the u.s. open, time to recap the asian trading session. sixuan has that wrapped up for us out of singapore. sixuan. >> thank you, ross. asian bourses wrapped up the month on a mixed note. it posted its best of january in 15 years. december factory output suggested the world's third largest economy may be recovering. sumi mitsui financial group rallied over 5% after posting a 4% job in its net profits for the last three quarters. nintendo took a hit down over 5% after slashing its full year forecast. the shanghai composite ended marginally higher and posted gains for a second month in a row. agricultural and environmental stocks rallied in support of
5:06am
more important policies. but jing may introduce a property tax program in the nearly term. hong kong shares forwarded its fifth monthly gain. lenovo slips around 8.2% of profit taking. elsewhere, the south korean kospi pulls back 0.1% after gaining for the past two days. it's the underperformer in january, down 2% this month. australia's asx 200 snapped a ten-day winning streak, but the index is still up 5 % for the month. india's sensex ended lower by about .5% today. back to you, ross. >> thanks for that, sixuan. we have tons of earnings out for thursday. you like to call it -- >> super thursday. that's not my moniker, though. forget the super bowl on sunday. this is the day to watch.
5:07am
if you stay up for it, by the way. >> lots between now and then, including earnings. deutsche bank shares trading higher today. despite posting a hefty loss. german lenders say 1 billion euros litigation charge and almost 10.2 billion euros to pay for structuring. that led to more than 2.5 billion euros. the group doesn't need to issue more shares to meet u.s. capital requirements. though they have left the door open to the potential sale of so-called cocoa bonds to comply with u.s. regulation. sylvia was parked herself in front of the deutsche bank headquarters in frankfurt and joins us for more. sylvia, why don't you strip out all the exceptionals, what do we think of the underlying performance? >> well, it wasn't all that
5:08am
good, but the market honed in on the capital number at the end of the day. they said, okay, we don't need any capital increase. we're not going to tap into the market for anything fresh. we are relatively happy with a capital ratios. so let's forget about all the bad news or the potentially bad news because a lot of this is risk provisions, write-downs for potential scandals, for potential court cases, for potential tax evasion that was in there. so at the moment, that has been taken almost positive by the markets saying, okay, they have conservative risk provisions. the rest was no surprise. they have restructuring costs and is restructuring problems for post bank, but ultimately, the feeling was the verdict from the market was there that the
5:09am
picture chas was the right one. we have the three pillar system for banks in germany. so post bank was the only thing to buy and it was a good one at that. but they have restructuring problems, also no surprise. so at the end of the day, the market gave it a tentative thumbs up rather than thumbs down. i don't think the performance was particularly good. but i think at this stage we said no nasty surprises and that was the good news. investment banking is still on the skids. >> sylvia said, the capital concerns are an issue for the markets. the co-ceo jane is saying there are no plans for additional job cuts yet, but they said it's possibly that could happen if market conditions change. santander, which is also trying to rule out raising further capital seeing its shares trading lower after the spanish
5:10am
net profits more than halved in 2012. it was hurt by write-downs in property asset necessary spain and a slowdown in latin america. santander is returning 24 billion worth of loans. the bank plan toes keep 11 billion euros of the money as liquidity insurance. stepha stephane, spanish banks are getting hit across the board the this morning. >> absolutely. it's back to reality. we mentioned yesterday the growing connect between the market sentiment. today, the market is sinking into these numbers from the real economy, the numbers from santander which were below expectations. it's actually the lowest profit for the bank since the year 2000. it was down 69% last year, below expectations. santander has been hit by some massive provisions to cover potential losses on its property portfolio that was more or less
5:11am
expected. what was more unexpected is the weakening profit from its operations and why we are speaking out of south america, that is a source of concern. and that will be one of the questions at the press conference that the bank will hold in about 50 minutes time. another question will be about the outlook for this year because the chairman of the bank is confident that santander will be able to post this year a growth -- sharply growing earnings. that's what it said this morning in a statement. that will be one of the key questions at the press conference this afternoon. another at lunchtime. so another -- in spain is bad loan ratio. you know at the end of december, the bad ratio to the spanish sector heats the record low. for the spanish operation, it was at 6.7% at the end of december. over to you, kelly. >> stephane, thanks very much for that.
5:12am
santander says its u.s. business could be in the second or third quarter of the year. >> should do it now given how good funding is for pe groups. the u.s. senate is expected to vote this afternoon on a bill to suspend the debt ceiling for -- why not suspend it indefinitely? the house passed the measure last week. the senate version includes several republican amendments, matching spending cuts, every dollar increase in the ceiling and that's not expected to get passed. it will suspend it to may the 19th when it will be raised by the amount the treasury borrows in the interim. why -- greg is with us. greg is the economist. can we just get rid of the debt ceiling? it's a real brawl. >> just deep six that sucker like no other country deals with this it ottic device. hey, i'm going to borrow some money, but i'll think twice over whether i'm going to pay the
5:13am
bill when it comes. >> what if it was the founding father himself who said i think we ought to have a debt ceiling so as to avoid fiscal recklessness? >> well, in fact, the debt ceiling, the reason we have one is because up until 100 years ago, we voted on every bond issue individually. so you think it's bad now, just imagine if we had had that situation. but looking forward, though, this is very much yesterday's story. it was interesting that the reason the dow took this latest jump upwards was because the house a couple of weeks ago signaled they weren't going to have a fight over the debt ceiling. now, people need to focus on the fact that the next big tripwire is the sequester. i think markets got a little bit complacent the one second. >> we want to talk about the federal reserve, as well. let's recap what the fed did. they kept their $85 billion bond buying policy on hold. interest rates remaining at close to zero. the fed says at least 0.1% dip
5:14am
in q4 growth is likely and that the rehabilitate slowdown in the economy was due to transitory issues. >> here is what's interesting. -- >> defense spending. >> you have the fed saying the slow yoen was transitory factors. but we've been talking about the sequester which potentially loomed. so yes, we got through one set of issues in the fourth quarter, but now we're turning around to one that people haven't been paying much attention to. >> right. the republicans didn't cave on the debt ceiling because they don't want to fight obama any longer, they just want to have a fight that they think they can win. that's why i think the probability that the sequester goes into effect is somewhat higher than the markets are anticipating. >> and that's a real hit to gdp. how much so? >> it's around $8 billion. it comes on top of the the payroll tax cuts on the rich. altogether, we're talking about 1.5% of fiscal drag.
5:15am
pretty significant. >> what was interesting in that report is that housing made a contribution and consumer spending was okay. those are the two things people are giving us momentum going into this year. >> that's absolutely the silver lining in that report. last year, we were worried that consumers and markets would crumble. we're going to get more of that if a sequester goes into everybody. >> are we at a point now where the economy -- generally speaking, where the private sector is strong enough to avoid that hit. if anything, it tells you that the economy is strong enough to not be thrown into a recession at this point. but it's premature to say we can handle all this tightening? >> yes. we've seen this movie before. the year starts so nice and strong and something causes it to hit a big mid year air
5:16am
pocket. but i think it's interesting that the jobless claims numbers might be pretty low. they might be distorted. the fact that the stock market seems to be doing reasonably well, that tells me that we have not seen a significant loss of melt yumm since the first quarter began. you have to watch this space because we have not sign the full effect and those rise in the taxes take effect. >> what's the main, if anything, point that changed in your view? we have the new members coming in, a little bit of a change in the language. but markets didn't seem to have too much of a reaction. >> no. i think the fed basically said, we've been giving you a lot to chew over lately. but a modestly optimistic tone to it, talking about preventing deterioration in the economy. but the big story is later on this year as they start to reach that $1 trillion mark of quantitative easing, will they see that suggestion?
5:17am
>> if i go around saying i want to get rid of the debt ceiling, where does that put me in terms of politics -- >> very left wing. why don't you try it and we'll see what happens. we'll do a documentary on it. >> a lot of people will be saying, what debt ceiling? >> exactly. and that's the point, right? we don't really have a debt ceiling, so let's not pretend that we do. you know what i mean. anyway, still to come on the show, u.p.s., will the shipping giant deliver? we'll talk about that. ♪
5:18am
[ male announcer ] make your escape... twice as rewarding. earn double points or double miles on all your hotel stays through march thirty first. sign up now at hidouble.com.
5:19am
5:20am
welcome back to "worldwide exchange." sap tander and deutsche are hit by big charges. british stocks are falling after disappointing numbers from shell and warning of a tough year ahead from astrazeneca. >> shell shares are down today after the oil and gas giant reported a 13% jump in fourth quarter profits. it was shy of forecast. the company has pledged to boost the dividend after posting adjusted cps earnings of $5.6
5:21am
billion of adjusted eps of 49.8 cents. in a first on cnbc interview, shell ceo peter voses sounded fairly confident. he cited the firm's cash position. >> shell is in a very good situation at the moment. we are actually long in opportunities. we could even invest more, but we will take the conservative view on how much we invest versus the cash flow we are going to get. and at the same time, as you have mentioned earlier on, as well, we are increasing our dividend. >> qualcomm's fist quarter profits rose 36% in revenues, 29% easily beating forecast on increasing demand for smartphones and high speed wireless services. the chipmaker says it's seeing strong growth in emerging markets. but the company remains cautious on the year ahead amid economic uncertainty.
5:22am
well, we have heard that one plenty of times. shares liked it, though. 5.6% in german trade this morning. and facebook's quarterly profits are down after spending on new initiatives. results still beat frarchlts. the social giant wraps up its mobile business with mobile ads making up .25% of that amount. as of december, 6.8 million users were accessing the site on smartphones, up 2% from 2011. investors were luke warm on the results. shares down 3.9%. so kind of weird, that. it seems to be about what revenue cutting? big jump in revenue from mobile ads. we'll talk about that a little bit later. >> one other story we have our eye on, 687 pounds after their flight was delayed in a first
5:23am
implementation of a landmark ruling. delayed passengers, as a result, will be entitled to refunds. >> so should passengers be compensated for delayed flights? and should this be implemented worldwide? if you want to join the conversation, e-mail us, tweet @cnbcwex or individually. >> a lot of people saying while it's a good idea maybe for people who are traveling, you're going to see it hit airlines to some extent. will it come through as higher fares? and what case should air lines be held responsible. >> and most people taking holiday will take travel insurance, anyway. i have permanent delay insurance. >> high roller. stek around. straight ahead on the program,
5:24am
will america's fiscal claims take a toll on the economy?
5:25am
5:26am
>> with hotwire's low prices, i can afford to visit chicago for my first big race and l.a. for my best friend's wedding. because when hotels have unsold rooms, they use hotwire to fill them. so i got my hotels for half-price! >> men: ♪ h-o-t-w-i-r-e ♪ hotwire.com welcome back to the program. in just a couple of hours, we're going to get a first look at
5:27am
jobless claims. let's hear what else is on the agenda today in the u.s. that report will be out at 8:30 a.m. eastern. also want to watch december personal income and spending. income is expected to be strong, up 0.8%. spending less by about 0.5%, leaving an increase in the savings rate at 10. the january chicago pmi is out, this an important gauge of the ism figure. analysts are looking for a reading back into expansion, 50.3 from 48.9 the last month. tomorrow, u.s. job growth is expected to pick up slightly for the january nonfarm payroll report, a gain of $166,000 is forecast by dow jones. they also expect the report to show tun employment rate holding steady at 7.8%. jobs strong, gdp weak, this seems to be a theme of the quarter. what is going on? >> gdp has been very choppy. fourth quarter, a slight negative. you have to average through those things. one of the reasons the fourth
5:28am
quarter was negative was because we had this unusual strength in defense spending in the third quarter. and a big drop in the fourth quarter was inventories. and as you know, that's kind of a positive going forward because companies will need to rebuild those inventory pes. >> what about the momentum in the labor market? we now are at 7.8%. are we going to get stuck here or are we going to fall closer to the threshold where the fed may think about acting? >> i continue to be the eternal optimi optimist. it will be the first big indicator we'll have that says how did the economy do after those tax increases went into effect in early january? and you have to tell you, there's a couple of positive straws in the wind. a couple of private surveys, housing is still strong. and i will be very interested to see what those jobless claims numbers show us in a couple of hours. >> yeah. we know the survey weak. they are low. but it does point to some hiring strength and do incomes remain a question with the payroll tax, consumer confidence is down.
5:29am
were you expecting to sail through that? >> i am worried about those confident numbers. look at the run up in the stock market in the last month or two. the last data we had on home prices, very positive. we have to some extent the wind at our back instead of a headwind. that is the first in a number of times that has been true. >> thanks so much for stopping by. >> good to see you. >> it's so nice. we don't have to talk to people through the cameras. >> it's really good. we're going to head out to frankfurt and talk about deutsche bank. aimings close a chapter after a series of damaging scandals. as we do that, just a reminder where we look now with futures ahead of the u.s. open a little bit later.
5:30am
5:31am
5:32am
welcome back to "worldwide exchange." i'm kelly evans. >> and i'm ross westgate. here are your headlines today from around the world. >> costly cleanup for europe's biggest financials. deutsch yeah bank posted bigger than expected fourth quarter loss on legal and restructuring processes. santander sheds toxic real estate assets. nearly 25% on facebook's ad revenue, investors seem to want
5:33am
more. if it is ft. giants like shell see earnings fall shy of expectations and astrazeneca warns of a tough year ahead. >> you're watching "worldwide exchange," bringing you business news from around the globe. >> all right. if you've just joined us stateside, welcome to the global trading day. >> it's super thursday, and not just because jobless claims are coming out, but because we've got a ton of earnings today. >> shares a little higher this morning. the group reporting strong operating performance for its divisions in the fourth quarter, despiting posting a hefty loss. they booked a $1 billion euro litigation charge, almost 2 billion euros to pay for restructuring. sylvia is in frankfurt, rejoins us. plenty of focus, as well, on the
5:34am
capital levels, sylvia. >> that's at least what the markets are clearly focused on. the write-downs or the risk provisions, not a big surprise. maybe the number was a surprise. but they didn't -- clearly didn't put enough money aside in the previous quarters. so maybe that was even some good news for the taking out of there, finally they woke up to the reality that they might have to pay out more than they originally planned. the operational side, not good, but no really nasty surprises. restructuring costs, again, of postbank of the higher side of the market has expected. the numbers were below expectations. but ultimately, the market gave it almost a thumbs up and saying, okay, we hone in op on the capital numbers on the key data. we hone in on the statement from the ceos, from theco ceos at the press conference. we don't need to go into the capital markets with a capital increase. that was taken as positive news.
5:35am
but there's no denying the fact that there is a sort of lingering dark shato over deutsche bank for other reasons. you mentioned the word scandals. you mentioned pending litigation. andrew jane and jorgen fitch promised a cultural change returning to the more classical business because the investment side is floundering. today, the markets focused on a little bit of good news they might have taken on from there. >> sylvia, thanks for that. >> deutsche bank has been the big story here this morning. the news will shift to the global barometer. our next guest says u.p.s. could post better than expected results on the back of solid e-commerce sales over christmas. donald, good morning. >> good morning. >> we talk about the holiday
5:36am
period. you say the timing might have helped them because they were able to deliver more packages by ground than air. >> that's exactly right. christmas fell on a tuesday and that's important because we had many high-end retailers, the nordstroms, neiman marcuss, the saks of the world all started offering free express shipping on anything ordered online up until noon on friday, december the 20th, for delivery on christmas eve. that should have driven higher than expected next day air volumes. but since christmas eve was on a monday, those volumes would be higher because the yield is the same price, but the cost is lower. you can move them from origin to destination point in a truck across the continental u.s. via truck, which is much cheaper than flying in a jet, of course. >> so you're looking bottom line for 1.35 a share in earnings, up about 2.7% for sales. if you broaden out from just the
5:37am
u.s. market, what do you expect u.p.s. to say broadly about global demands? >> well, they're a much bigger player in europe than in asia. obviously, you know well what's going on in europe. it's not a robust contraction. so i don't think international results can be expected to rescue the quarter. but -- and, quite frankly, u.p.s. makes its bread and butter here in the u.s. and for the parcel volume to be up 3%, which is what we're looking for, will be rebust. given what we know now as of yesterday's post was a negative 0.1 contraction in the economy. >> and how important is it for them that that tnt deal did not happen and what would be next? >> for many months now, we've known that dan noon epu didn't want danny to marry his
5:38am
daughter, much less date her. i think what is key is they can go back into exiting businesses rather than this one that they wanted to take over. >> does that mean they won't look for something else in another part of the world? >> i don't see really anything else. i think they'll do what they should have been doing all along, quite frankly. we had the stock rate really to sell at one point last year because we thought they were being distracted and not focused on what they needed to focus on. say they go back and try to grow their purchases and repurchase shares, etcetera. >> donald, briefly, u.p.s. or fedex? >> well, actually, i've got both of the stocks because they've gone up so much ready to market perform and the group ready to underperform. i think they're a little stretched in valuation. >> donald, thank you for that.
5:39am
kelly. >> now, that will be an important gauge of what's happening in global demand. if you take nair value into account, about 11 points negative on the open for the dow. the s&p and nasdaq also pointed lower. it would take much bigger declines for these indexes not to have one of their best januarys on record with the increases in the range of 5% to 6%. we've been asking this question, forget sell in may, is it time to sell in january? this is an interesting question at least for this year. european markets, especially in spain, it's a different story. earnings, we're seeing a negative reaction by and large. the ftse down about 0.4%.
5:40am
about 0.3% for the xetra dax. cac 40 down 0.6%. the ibex 35, the weak spot, down 1.6% after santander's disappointing report and taking spanish banks by and large down with them, even credit agricole under pressure today. so, you can stop hoarding your twinkies the. hostess has found potential buyers. find out just who, after the break. all stations come over to mission a for a final go.
5:41am
this is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet...
5:42am
dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers.
5:43am
welcome back to the program. here are a couple of stories to check out on our website. the dow jones industrial average began yesterday's session just 46 points from hitting 14,000 on a clear course to trade above a level it hasn't seen since 2007. according to some, did dow is up about 10% from its fourth quarter low. can it take out that 14,000 level? le read what analysts are saying at cnbc.com. check out this one after beating analyst estimates from the quarter. can the stock go higher or is it too hot already? now rim shares dropped 12% after the highly anticipated launch of
5:44am
2010 and a name change? some analysts argue the phone does look promising and has potential. what does that mean for blackberry shares? seeing the reaction on our website. >> and it's all about earnings as you've been saying today, kelly. take a look at the ibex. underperforming the rest of the markets mainly because of the banks. the reasonable here down is because of what banco santander said today. hurt by write-downs and they moved to set aside 18.8 billion euros in provisions against bad loans and assets, as well. they have now covered all of their government enforced divisions in spain. i have said they may make charges for another 1 billion today because they may sell out some more assets with the property at deep discounter prices. santander today dragging the
5:45am
entire spanish sector down, down also 3%, as well. >> a lot of red across the board for banking stocks there. if if you're just joining us, these are your headlines. earnings at santander and deutsche bank are hit by hefty charges. facebook results leave investors wanteling a little bit more. and you can stocks falling on disappointing numbers from shell and a warning of a tough year ahead from astrazeneca. >> all right. those are the headlines. a reminder of other stories we're following, citigroup is looking to exit consumer banking in more countries as part of its efforts to cut costs. pulling out of pakistan, paraguay and euroguay. reuters suggests the company has been looking for months at other countries, but hasn't yesterday identified them publicly.
5:46am
consumers say 40 of the 100 countries it's in, only three outside the u.s. mexico, south korea, australia count for half of its consumer loans. citi stock in frank fur ticking mildly higher. pretty flat. >> it's a fascinating story for them, though. the global business has been one of the main reasons for its share performance. in any case, the "new york times" says it's been the target of chinese hackers several times in the last four months since the paper published around article on wen jiabao. the family had amassed nearly $4 billion in riches. the times says hackers broke into e-mail accounts, but no sensitive material was accessed. and former program financial ceo russell rusendorf will be sentenced today. he's admitted to losing nearly $100 million pounds and
5:47am
prosecutors are asking for 50 years in prison. a former intel will be sentenced today, as well. she admitted to engaging in insider trading in 2007, but lies she initially told investigators could determine whether she avoids prison. ti strong homes, the company pricing its shares. the company builds single family homes and planned communities movedly in northern california. it's owned by starwood capital. shares will trade under tph. and whatever they are, you can stop hoarding them. twinkies. >> what do you mean whatever they are? you know what twinkies are. you've twinkies. >> no, i haven't. it's a north american thing, okay? apparently, they're iconic and
5:48am
they're log shaped pound cake wes a cream filling. >> and they've been saved. >> that's the key thing, i think. >> hostess has whoven two lead bidders for the majority of those assets. ma drop his also owns pbr. r. we've got a whole weekend planned. you can now toast twinkie wes a plan of pbr ribbon. >> what are you going to do with that paper, by the way? >> whack you with it if you don't eat a twinkie soon. the question is what age should you sthop eating twinkies? >> is that what you eat -- >> it's kid food. by the way, most american food is kid food. so there's no age when people stop eating twinkies. >> i feel educated. coming up, will investor hes revisit facebook's results and
5:49am
will they like the stock? revenue driven by strong growth in mobile and the stocks down after hours. how do we square that?
5:50am
[♪...] >> i've been training all year for the big race in chicago, but i can only afford one trip. and i just found out my best friend is getting married in l.a. there's no way i'm missing that. then i heard about hotwire and i realized i could actually
5:51am
afford both trips. see, when really nice hotels have unsold rooms, they use hotwire to fill them. so i got my four-star hotels for half-price! >> men: ♪ h-o-t-w-i-r-e ♪ hotwire.com >> announcer: save big on car rentals too, from $12.95 a day. woin to the program. u.s. futures are pointed lower this morning. the dow has been steadily moving lower. we take a look at earnings here in europe and start to turn our attention to what we might hear in the u.s. strong gains, up 5.3% for the s&p. it's not just one of its strongest januarys by historical standards. it's one of those signs that may point towards a better year.
5:52am
>> a lot riding on what happens today. so if the s&p mthd to book a gain by 5% by the end of play today for january, it means that 11 out of 12 times previously thattite done that, the market then has a double digit gain for the year. >> where do you think we're going to fall on this chart? i vote we're not going to to be on this at all. >> we will be at the lowest -- it will be the lowest double digit gain out of that record. >> okay. you are now on report, my friend. and investors have found -- yeah. investors have found a bit of good news and bad news in facebook's fourth quarter earnings report. the highlight was strong growth in the company's mobile business. julia boorstin has broken down the numbers us.
5:53am
facebook beat on the top and bottom line reporting earnings per share of 2 cents more than expected on 40% revenue of a year ago. ceo mark zuckerberg kicked off the earnings call by talking about mobile saying for the first time more people use facebook on mobile devices every day than use facebook on the desktop. but he acknowledged that the shift to mobile has been challenging saying it's facebook's biggest opportunity. mobile monthly users grew 57% in the quarter to 680 million people while mobile ads are now responsible for 23% of facebook's total ad revenue. despite the beat, shares plummeted, rebounding to a few percentage points lower. perhaps the disappointment was because investors expected a bigger beat or were hoping to see more mobile revenue. zuckerberg moderated expectations on the call talking about ads being at the core of facebook's business for quite a while. but he did say facebook will continue to invest heavily, to grow head count and to invest in new businesses like graph search.
5:54am
facebook saying facebook is investing in the long-term growth potential rather than maximizing profits from right now. from cnbc los angeles, i'm julia boorstin. >> for more, we're now joined by scott tessler, joining us on the line from new york. good morning. >> good morning, kelly. >> perhaps you can help us understand the facebook share reaction tr yesterday. it seems investors are trying to get a clear understanding of what their report indicates in the future. >> well, look. i think initially people took umbrage, perhaps, in the fact that facebook, the stock itself has risen more than 50% from the lows seen in september. estimates had been rising. and if you look at the results, sequential acceleration in revenue growth, i think people were probably pretty
5:55am
enthusiastic about what they said about mobile. and another improvement. so you ask, why was the stock indicated lower? these things were touched upon. number one, they indicated that they're going to be spending aggressively in 2013 and, in fact, indicated that growth in spending will exceed growth in revenues. nadz to that, they indicated that these new product offerings, that people had been pretty excited about, like gifts, like graph search will be monetized in the near future. that maybe leaves revenues on the table in people's opinions. >> we heard people looking to maybe a 15% total share of revenue and, in fact, it was almost 25%. so, you know, if you wanted to look for positive signs, that would surely be one of them. >> yeah. the way i look at this, they
5:56am
pointed to mobile revenues doubling from q3 to q4. which, granted, qhad is a seasonally strong quarter, but nonetheless, that is an impressive performance by all counts, i would argue. and in addition, the fact that they were able to do that and not only maintain, but improve margins said says a lot about how mobile is going to contribute to growth in the future. i think at this point, they may be looking to a couple of data points. look at average revenue peruser. it was a little over on $5 in 2011. in 2012, $5.32. not a huge improvement. then facebook talked about continuing to hire aggressively. this company ended last year at about four times that rate. so they're growing very rapidly, they're investing very rapidly
5:57am
and not monetizing aggressively in some of these new years. that maybe contributed to the disappointment some people have seen. so they start cracking mobile and then they quarry the investment on the angle. how much do you think this company needs to invest? >> that's an interesting question, ross. far be it for me to know exactly how facebook should strategize. but i think it's fair to say that they're being very aggressive in terms of not just investing, but building for the future. that goes for new product efficientives as well as fukt that's necessary to support the tremendous growth that they've already deliver and anticipate.
5:58am
if they continue to invest and deliver the growth, then people will be somewhat placated. >> scott kessler, thank you for joining us. "squawk box" is coming up next. >> have a wonderful thursday.
5:59am